The Real Deal New York

Jack Terzi’s JTRE sues Chinese firm Sonangol over 23 Wall deal

Firm is in $140M contract to purchase storied FiDi building
By Rich Bockmann and Christian Bautista | December 22, 2017 05:42PM

Jack Terzi and 23 Wall Street (Credit: Twitter and JSR Capital)

Jack Terzi’s $140 million deal to buy the former JPMorgan building at 23 Wall Street is in jeopardy because the seller, China Sonangol, allegedly refuses to play ball.

According to a lawsuit Terzi filed against Sonangol in Manhattan Supreme Court Friday, he alleges that his deal isn’t moving forward because of Sonangol’s refusal to cooperate with the escrow agent. The escrow agent has refused to release the down payment on the purchase, because of concern that controversial Hong Kong tycoon Sam Pa may benefit from the deal, the suit claims.

Pa was the CEO of Sonangol – his current affiliation with the company is unclear – a Singapore-based conglomerate that has been in contract to sell the historic Financial District property to Terzi for over a year.

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If the deal does not go through, Terzi is demanding that Sonangol pay at least $250 million in damages, and return a $17 million down payment. Terzi could not be reached for comment.

Pa was detained by Chinese authorities in 2015 as part of President Xi Jinping’s anti-corruption campaign. In 2014, the U.S. alleged that Pa bribed Zimbabwean officials in order to carry out “illicit diamond deals.” He is on the Treasury’s “Specially Designated Nationals and Blocked Persons” list, which prevents Americans from doing business with him.

Terzi, who’s known mostly for buying and leasing up small and mid-sized retail properties, shot into prominence last year when he entered contract to buy the 160,000-square-foot property at 23 Wall at the eye-popping figure of $140 million. But month after month went by, and he never closed, raising speculation that all was not smooth with the deal. According to sources familiar with the property, Terzi has been in talks with Paramount Group to provide financing for the acquisition and redevelopment.

According to the suit, JTRE and Sonangol entered into contract in August 2016, a year after Pa’s detention. At the time, Sonangol claimed that none of the proceeds from the sale would go to Pa. After the agreement was signed, the two sides agreed to put the down payment into an escrow account. However, Signature Bank, the lender in charge of the escrow, refused to give the money to Sonangol without further proof that none of the proceeds would to go Pa, the suit claims. When JTRE attempted to hire a regulatory law firm to provide evidence of this, Sonangol refused and attempted to nix the deal.

The former JP Morgan building at 23 Wall has long sat dormant since the bank stopped using the building in the late 2000s. Sonangol bought the property in 2008 for $150 million from a subsidiary of Lev Leviev’s Africa Israel Investments. But attempts to court tenants like Apple and an entertainment venue never came to fruition.

Hiten Samtani contributed reporting.